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Wednesday, 13 May 1936

Senator HARDY - And, secondly, those great opuses, the combines, which deprive the worker of his rightful due. Perhaps I have not used the honorable senator's exact phraseology, but he has conveyed that impression in at least a dozen speeches reported in Mansard. In the report of the Tariff Board three main issues are considered. Two of them deal with those evils, excessive profits and combines, which ure so vigorously condemned by the Leader of the Opposition. Three broad issues are involved in this item and the Tariff Board has placed on record, after, not one, but two investigations, at which it had the fullest opportunity of sifting evidence, that the profits made by the manufacturers as a whole were unreasonably high. In spite of that finding, the Leader of the Opposition, who is disposed to combat excessive profits at every opportunity, now endeavours to maintain the duties which have enabled them to make the excessive profits condemned by the Tariff Board.

Senator Collings - The duty has been reduced from ls. to 6d. per hundredweight.

Senator HARDY - When dealing broadly with the matter of profits we find that the Australian cement companies during the most unfavorable five years, economically, that Australia has ever experienced, made a total profit of £2,250,000. If that profit has been made during a " boom " period perhaps I could agree in part with the views of the Leader of the Opposition; but I emphasize that it was made when the average industry in Australia was struggling for its very existence. Because these companies were members of a combine they were able to extract from the public a succession of high prices in order to make a profit of £2,250,000. Is it not the policy of the Leader of the Opposition to protect the worker from excessive profits? When referring to cement in my second-reading speech, I asked why the Labour party had included this principle in its policy of " New Protection " ; the Leader of the Opposition did not hesitate to reply that the intention was to ensure that the worker should secure a reasonable share of the benefit which the manufacturer enjoyed through the incidence of the high tariff.

Senator Sir George Pearce - The " New Protection " was to provide also for reasonable prices to the consumer.

Senator HARDY - That is so. The investigations of the Tariff Board and, I believe, of the Leader of the Opposition, have demonstrated that 2,000 men are employed in the manufacture of cement in Australia. If honorable senators divide that number into the total profits of £2,250,000 which were returned during a period of five years, they will find that the cement manufacturers made out of each worker employed in the industry £225 per annum.

Senator Brown - What did the wool kings make out of their employees?

Senator HARDY - The Leader of the Opposition advocated that the manufac- *turers of cement should be allowed to proceed as formerly. Does he consider that the figures I have quoted reflect a fair distribution of profits to organized labour? Over and above the cost of production, the cement manufacturers made a profit of £225 a man for each of those years.

Senator Collings - Those figures are childish.

Senator HARDY - I suggest that if the Leader of the Opposition takes a pencil and paper and works out the figures for himself he will reach the same conclusion as I have. If there was one aspect which I expected the Leader of the Opposition to bring up for consideration on this item, it was the matter of the excessive profits made by the cement companies in the United Kingdom. The figures quoted by him are perfectly correct; I have before me the same extract as he quoted. Although the Tunnel Portland Cement Company made a profit last year of 20 per cent., I ask honorable senators to consider at what price that cement was sold in Great Britain. Was it £4 10s. a ton, the price charged to Australian consumers by local manufacturers? No; the domestic price in Great Britain was only £1 10s. Yet on the domestic price of 30s. a ton - it is only reasonable to assume that the export price would be lower - they have had no difficulty in making profits ranging from 20 per cent, to 30 per cent. Honorable senators should not overlook the tremendous discrepancy which exists between the price of British cement and that of the Australian product. I know that the Leader of the Opposition will refer to the increased labour costs in Australia, and the smaller production of Australian plants; but, if these factors are considered separately, as they have been by the Tariff Board, the onus is upon the Opposition to show why there should be such a tremendous discrepancy between the British and Australian prices. The average prices of cement in the Australian capital cities are as follows: - Brisbane, £4 lis. 9d.; Sydney, £4 10s. lid.; Melbourne, £4 6s. 8d. ; Adelaide, £4 14s. 7d.; Perth, £4 7s. 9d.; and Hobart, £4 15s. 6d. a ton. If British cement companies can make the enormous profits mentioned on a selling price 0 of 30s. a ton, why do the Australian cement manufacturers require 90s. a ton?

Senator Payne - Where did the honorable senator obtain the selling price of 30s. a ton ?

Senator HARDY - Prom the Economist. If honorable senators in opposition expect to receive support from impartial honorable senators, they will have to explain the reasons for this discrepancy.

If we review the situation impartially, we must conclude that the industry i3 heavily over-capitalized. We have then to determine whether we should support such an over-capitalization with the consequent penalty which it inflicts upon the users of cement. The cement companies form one of the greatest combines operating in Australia; otherwise there would be greater competition in prices. I find that from 1925 to 1934 the price of cement has been steadily maintained. The chairman of directors of the Kandos Cement Company, in presenting his annual report to the shareholders, is reported to have said -

The cement industry is in a worse position in New South Wales than in any other State. There are far too many companies operating in that State, and any one of the five large companies in New South Wales could supply all current requirements.

That admission was made by the chairman of directors of the leading company in the Commonwealth. He continued -

Since 1921 the capital invested in cement companies has been increased by over 500 per cent., while productive capacity ha* increased from 150,000 tons in 1921 to 579,000 tons in 1930. To make matters worse it i? understood that it is proposed to float a new company; a step which would make the industry very much overdeveloped.

The paid-up capital of these companies on the 30th November, 1934, was estimated at £4,341,799, and the disclosed reserves £761,565, so that the aggregate capital employed was approximately £5,000,000. Did this capital produce £5,000,000 worth of cement? It did not. The production was valued at about only one-third of the total capital employed in the industry, but the profits of the companies operating as a combine amounted in five years to £2,250,000. These profits should be considered in conjunction with the fact that British manufacturers are selling their product at 30s. a ton, and making large profits. In these circumstances, it is impossible to substantiate the claim that a reduction ofdutywill have a serious effect upon the Australian cement-making industry.

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